The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Nick Cash - Goldman Sachs Group, Inc. - Analyst
: This is actually Nick Cash on the line for Brian. I just kind of wanted to dive in to Durham a little bit. I guess how much of your outlook at Durham
is still levered to I&E? And how much visibility do you have regarding the Durham Fab has finally troughed in terms of demand and margin profile?
And I guess how quickly into what level can that recover to? And I guess one more touching on, I guess, the equipment incident at the facility, you
mentioned a possible $20 million impact to first quarter '25 revenue. Is that guide you guys gave inclusive of that $20 million impact?
Question: Harsh Kumar - Piper Sandler & Co. - Analyst
: But Gregg, let me ask you the loaded question that's on every investor's mind here. I think the market has sort of liquidity concerns about both
Wolfspeed and it's kind of evident in the stock price decline here. So my question for you is, what is the bare minimum that you have to spend on
JP assuming the Mohawk Valley is not equipped. And so is there a way that you could materially cut down the CapEx? And then I think you also
mentioned that you're looking at positive free cash flow by early 2026. Could you maybe help us bridge that between now and then?
Question: Joseph Cardoso - JPMorgan Chase & Co. - Analyst
: This is Joe Cardoso on for Samik Chatterjee. Just curious like the potential closure of the Durham Device Fab would be quite a shift in strategy
relative to prior closures. I think $400 million of revenue was coming from that footprint when it's fully loaded.
So just curious if you could just dive into that or flesh it out a bit more what the exact thought process here is to close -- around closing that fab
and take it out of the long-term model? And then maybe the second part of that question is, what does that imply for the existing footprint there
in Durham?
Question: Colin Rusch - Oppenheimer & Co., Inc - Analyst
: In terms of monetizing these tax credits that you've accrued. Are there operational metrics that you need to meet? Or are those things that you
can actually just cut and monetize in the market? And can you talk a little bit about potential transferability on those grants?
Question: Jed Dorsheimer - William Blair & Co LLC - Analyst
: Just help me with a little back of the envelope math here. If I carry your margins in the Materials business, and then I back out underutilization in
the start-up, I get about $3 million spread between Mohawk Valley and Durham.And if I use the 500 basis points it looks like a negative or gross
profit dollar loss in derm of about $5 million. Is that correct? And that would imply about a 20% margin for Mohawk Valley. I just want to make sure
I'm looking at that correctly.
Question: Joshua Buchalter - TD Cowen - Analyst
: I wanted to ask about the Mohawk Valley ramp and time lines of revenue. Is the right rule of thumb still when you reach those utilization levels,
you get revenue, I think it's roughly two to three quarters later, because that would imply that you're in the fiscal third quarter of 2025, a number
comfortably above $100 million out of Mohawk. And then maybe as a follow-on to that question, what's the time line to get to the 30% beyond
that? And how does that coincide with The JP layering in as well?
Question: Joe Moore - Morgan Stanley - Analyst
: I think you gave an EV number in terms of the percentage growth, but I didn't hear an absolute number. I wonder if you could help us kind of size
where you are now with EV and what you're classifying as EV?
Question: Christopher Rolland - Susquehanna Financial Group, LLLP - Analyst
: Are there any more details on the incident in Durham? What exactly happened there? You guys had mentioned when you were initially ramping
Mohawk that you didn't have redundant lines or backup equipment there. Has this changed like over time over the past year? And do you feel
comfortable that you guys would be able to absorb an equipment failure or a similar problem in Mohawk?
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